As discussed in more detail in our previous post,
FINRA Proposed Rule Change Would Expand Arbitrator Selection Lists, the amendments to FINRA rules will increase the number of arbitrators
available for selection by the parties. For each type of arbitrator on
a three-member panel – the public chair-qualified arbitrator, the
public arbitrator, and the non-public (or “industry”) arbitrator
– the rule change increases the number of proposed arbitrators from
eight to ten.

The number of strikes available to each party would remain at four. Thus,
in a typical case, at least two of the proposed arbitrators would remain
on each list of ten after the parties have used their strikes. This increases
the likelihood that the parties will get panelists they actually chose
and rank, as opposed to extended list appointments. It would also reduce
the need for extended list appointments when vacancies occur in a panel
later in a case.

In its order, the SEC stated that the rule change “will protect
investors and the public interest by providing investors greater control
in the arbitrator selection process.” The rule change will reduce
the number of instances where an arbitrator is appointed with no input
from or approval by the parties. The SEC hopes this will “enhance
investor and industry participants’ confidence in the arbitration
process.”

The proposal gained support from both the securities industry and those
who represent investors in securities arbitrations (including the Public
Investors Arbitration Bar Association(PIABA)).